1. All of the following are advantages of decentralization except:

A. to improve customer relations.

B. to encourage use of expert knowledge.

C. To increase employee motivation.

D. to allow goal congruence to be achieved more easily.

2. All of the following are responsibility centers except:

A. profit centers.

B. Investment centers.

C. customer centers.

D. cost centers.

3. The differences between actual and budgeted figures are known as:

A. fluctuations.

B. variances.

C. overages.

D. underages.

4. Which of the following is a performance measure commonly used to assess the performance of investment centers?

A. Return on investment

B. Profit margin

C. Current ratio

D. Gross income

5. Residual income is calculated as:

A. revenues less expenses.

B. contribution margin less minimum acceptable income.

C. Operating income less minimum acceptable income.

D. Sales less variable costs.

6. Which of the following is NOT a strategy for determining the transfer price of a product?

A. Related party discounted price

B. Market price

C. Cost or cost-plus a mark-up

D. Negotiated price

7. Employee capabilities, information system capabilities, and the company’s “climate for action” are important factors of the:

A. Employee perspective.

B. customer perspective.

C. internal business perspective.

D. learning and growth perspective.

8. Assume Cucumber Company expects each division to earn an 8% target rate of return. Assume the Company’s Pickle Division had the following results:

Sales                                        $24,500,000

Operating income                         1,250,000

Total assets                                15,500,000

The Division’s ROI is:

A. 8.1%.

B. 15.8%.

C.5.1%.

D. 8.0%.

9. Assume Ametrine Company expects each division to earn an 8% target rate of return. Assume the Company’s Division A had the following results:

Sales                              $24,500,000

Operating income              1,250,000

Total assets                      15,500,000

The Division’s RI is:

A. −$10,000.

B. $10,000.

C. −$710,000.

D. $710,000.

10. Which of the following are examples of KPIs?

A. Average customer satisfaction ratings

B. Number of repeat customers

C. Sales revenue growth

D. All of the above are examples of KPIs